Domino’s Pizza (US): A Potential Spring 🍕

Sometimes the best trades are the ones that look wrong for just long enough to trap the crowd.

Domino’s Pizza (US) delivered a textbook spring setup, price briefly undercut prior range lows, triggered stops and breakout sellers… and then immediately reversed back into the range.

That false breakdown told us a lot.

What is a Spring?

In Foundry Strat terms, a spring occurs when:

• Price pushes below established support

• That move fails quickly

• Price reclaims the range, leaving sellers trapped

  
  

It’s not the break that matters, it’s the failure.

What Happened in Domino’s?

Domino’s had been trading within a defined range. When price dipped below the range lows, it looked like a clean bearish continuation:

• Stops were run beneath support

• Shorts likely initiated on the “breakdown”

• Weak hands exited longs

• 
  

But crucially, there was no follow-through.

Instead, price snapped straight back into the prior range, reclaiming support almost immediately. That’s your signal:supply was absorbed, not expanded.

Why This Matters

False breaks are information-rich events. They tell you:

• Sellers are present, but not dominant

• Larger players are likely accumulating liquidity

• The market is rejecting lower prices

  
  

Once price is back inside the range, the probability shifts. The path of least resistance is no longer down.

How We Think About the Trade

A spring isn’t about predicting bottoms, it’s about confirmation of failure.

Key elements we look for:

• Clear range support beforehand

• A decisive undercut (not a shallow poke)

• Fast reclaim back into the range

• Acceptance above former support

  
  

Risk is defined. If price cannot hold back inside the range, the thesis is invalidated quickly.

The Bigger Picture

Springs work because they exploit behaviour:

• Traders sell breaks

• Stops cluster at obvious levels

• When those levels fail to hold, the unwind fuels the move back up

Domino’s gave us a clean example of this dynamic in action.

No prediction. No guesswork.Just price showing its hand.

The entry is on the close of the last candle. Stop is below the low of the prior day. As usual we'll check back in with an update when the trade has run its course.